Silver (XAG/USD) - Major Double Top Formation | Weekly Timeframe Analysis
🔷 Technical Pattern Overview
The weekly chart of Silver against the US Dollar (XAG/USD) reveals the formation of a textbook Double Top pattern, signaling a potential major bearish reversal. This pattern reflects market psychology — buyers attempted twice to push the price higher but failed both times, highlighting exhaustion and paving the way for a deeper correction.
Top 1 occurred around $33.50-$34.00, with significant rejection, indicating strong resistance.
After an intermediate pullback into the support zone ($30.50-$31.00), bulls attempted a second rally.
Top 2 formed slightly lower than Top 1, showing lower momentum and a failure to create a higher high — a clear bearish signal.
Following the second top, price action turned sharply bearish with large-bodied red candles, increasing selling pressure.
🔷 Key Structural Levels
Resistance (Sell Zone):
$33.50 – $34.00
This zone acted as a ceiling twice, validating its strength. Sellers aggressively defended this area.
Support (Breakdown Zone):
$30.50 – $31.00
Serving as a neckline for the double top. A confirmed weekly close below this area will trigger further bearish momentum.
Stop Loss (SL):
$36.40
Placed safely above previous highs to allow room for volatility and avoid fakeouts.
Take Profit 1 (TP1):
$26.96
Based on the measured move of the double top’s height projected downward.
Final Target (TP2):
$25.23
Major historical support zone from previous price action in mid-2023, adding confluence to the target.
🔷 Trade Strategy Plan
Short Entry Trigger:
Confirmed breakdown and weekly candle close below the $30.50 support zone.
Ideal scenario includes a break–retest setup, where price retests the broken support as resistance, offering a safe short entry.
Risk Management:
Stop Loss at $36.40, above structure highs to protect against surprise bullish rallies.
Profit Strategy:
First TP at $26.96 to secure partial profits.
Move Stop Loss to Breakeven after TP1 hit.
Final TP at $25.23 for maximum reward potential.
Risk-Reward Ratio (RRR):
Highly favorable (above 2.5:1), making it a strategic trade from a risk management perspective.
🔷 Market Psychology Behind the Pattern
Double Top Formation:
A double top is a result of buyers losing strength after two failed attempts at breaking higher. Sellers gain confidence as bulls tire, leading to a potential trend reversal.
Volume Confirmation:
An increase in sell-side volume on the break of support will strengthen the pattern's validity.
Sentiment Shift:
This formation hints at a broader sentiment shift in the precious metals market, likely driven by macroeconomic forces like stronger USD, interest rate policies, or deflationary pressures.
🔷 Additional Technical Observations
Bearish Divergence:
If examined on oscillators like RSI or MACD, it’s likely there is a bearish divergence developing between Top 1 and Top 2 (weaker momentum on Top 2), further confirming downside risk.
Trendline Break:
A major uptrend line since early 2024 has been breached during the second rejection, indicating a transition from a bullish to a neutral/bearish phase.
Fibonacci Confluence:
The 50%–61.8% Fibonacci retracement levels align closely with the $26.96 and $25.23 targets, offering additional technical validation.
🔷 Macro Factors to Watch
Federal Reserve policies (interest rates direction)
US Dollar Index (DXY) movements
Inflation and commodities cycle (silver as an industrial and safe-haven metal)
Global economic data influencing precious metals demand
🔥 Summary
The Double Top on Silver (XAG/USD) signals a major trend reversal opportunity for traders and investors.
Given the clear rejection at resistance, critical support testing, and confluence with multiple technical tools, this setup offers a high-probability bearish trade with excellent risk-reward dynamics.
A break below $30.50 could open the doors for a strong decline toward $26.96 and $25.23.
🔔 Patience is key: wait for confirmation with a breakdown and retest before entering. Trade safe!
🔷 Technical Pattern Overview
The weekly chart of Silver against the US Dollar (XAG/USD) reveals the formation of a textbook Double Top pattern, signaling a potential major bearish reversal. This pattern reflects market psychology — buyers attempted twice to push the price higher but failed both times, highlighting exhaustion and paving the way for a deeper correction.
Top 1 occurred around $33.50-$34.00, with significant rejection, indicating strong resistance.
After an intermediate pullback into the support zone ($30.50-$31.00), bulls attempted a second rally.
Top 2 formed slightly lower than Top 1, showing lower momentum and a failure to create a higher high — a clear bearish signal.
Following the second top, price action turned sharply bearish with large-bodied red candles, increasing selling pressure.
🔷 Key Structural Levels
Resistance (Sell Zone):
$33.50 – $34.00
This zone acted as a ceiling twice, validating its strength. Sellers aggressively defended this area.
Support (Breakdown Zone):
$30.50 – $31.00
Serving as a neckline for the double top. A confirmed weekly close below this area will trigger further bearish momentum.
Stop Loss (SL):
$36.40
Placed safely above previous highs to allow room for volatility and avoid fakeouts.
Take Profit 1 (TP1):
$26.96
Based on the measured move of the double top’s height projected downward.
Final Target (TP2):
$25.23
Major historical support zone from previous price action in mid-2023, adding confluence to the target.
🔷 Trade Strategy Plan
Short Entry Trigger:
Confirmed breakdown and weekly candle close below the $30.50 support zone.
Ideal scenario includes a break–retest setup, where price retests the broken support as resistance, offering a safe short entry.
Risk Management:
Stop Loss at $36.40, above structure highs to protect against surprise bullish rallies.
Profit Strategy:
First TP at $26.96 to secure partial profits.
Move Stop Loss to Breakeven after TP1 hit.
Final TP at $25.23 for maximum reward potential.
Risk-Reward Ratio (RRR):
Highly favorable (above 2.5:1), making it a strategic trade from a risk management perspective.
🔷 Market Psychology Behind the Pattern
Double Top Formation:
A double top is a result of buyers losing strength after two failed attempts at breaking higher. Sellers gain confidence as bulls tire, leading to a potential trend reversal.
Volume Confirmation:
An increase in sell-side volume on the break of support will strengthen the pattern's validity.
Sentiment Shift:
This formation hints at a broader sentiment shift in the precious metals market, likely driven by macroeconomic forces like stronger USD, interest rate policies, or deflationary pressures.
🔷 Additional Technical Observations
Bearish Divergence:
If examined on oscillators like RSI or MACD, it’s likely there is a bearish divergence developing between Top 1 and Top 2 (weaker momentum on Top 2), further confirming downside risk.
Trendline Break:
A major uptrend line since early 2024 has been breached during the second rejection, indicating a transition from a bullish to a neutral/bearish phase.
Fibonacci Confluence:
The 50%–61.8% Fibonacci retracement levels align closely with the $26.96 and $25.23 targets, offering additional technical validation.
🔷 Macro Factors to Watch
Federal Reserve policies (interest rates direction)
US Dollar Index (DXY) movements
Inflation and commodities cycle (silver as an industrial and safe-haven metal)
Global economic data influencing precious metals demand
🔥 Summary
The Double Top on Silver (XAG/USD) signals a major trend reversal opportunity for traders and investors.
Given the clear rejection at resistance, critical support testing, and confluence with multiple technical tools, this setup offers a high-probability bearish trade with excellent risk-reward dynamics.
A break below $30.50 could open the doors for a strong decline toward $26.96 and $25.23.
🔔 Patience is key: wait for confirmation with a breakdown and retest before entering. Trade safe!
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.